The contentious issue of reducing tariff lines on auto sector may not figure in the negotiations over the proposed broad-based trade and investment agreement (BTIA) between India and the European Union. India and the European Union have been negotiating hard over a free trade agreement (FTA) that is likely to be signed by the end of the year. EU has been demanding a duty reduction on imported cars from 60% to 30%. The Indian automotive industry has already cautioned against giving concessions to EU-based auto majors including lowering duty on imported cars in the proposed free trade agreement (FTA).
According to a senior government official, commerce minister Anand Sharma in his talks with EU trade commissioner Karel De Gucht said since the industry is in the nascent stage in the country, there is very limited room for manoeuvre. ?Since most of the tariff lines have remained in the negative list in all our FTAs, I may again mention that both these are areas where India has never ventured into before in any FTA and hence, much more cannot be expected,? Sharma told the 27 block trade commissioners recently.
The auto industry has also pointed out that such a grant would create disparity among global companies from Japan and Korea with those in Europe as the former have made significant investments in India.
Also, according to the Automotive Mission Plan (AMP) 2016, any such reduction in duties will be a clear deviation from the commitments made by the government under the Automotive Mission Plan (AMP) 2016. The AMP 2016 had envisaged a revenue of $145 billion by 2016 for the Indian auto industry, accounting for 10% of GDP and creating 25 million jobs.
EU also wants India to open up the the sector of wines and spirits by lowering import duty. But government now wants mutual understanding with EU to resolve any such issues. ?I would request EU understanding to resolve these politically sensitive issues,? Sharma is said to have told EU trade commissioners.
